There's yet another rumor going around that Apple is getting ready to launch a subscription music service. That's been rumored for ages, and it would be surprising if the company didn't do it. In fact, many were surprised that after Apple shut down music locker Lala that it didn't immediately launch a cloud based subscription offering. But, perhaps more interesting, is the fact that Apple has also been spending time trash-talking Spotify to music industry execs. We had mentioned, when Apple shut down Lala, that it would be a good time for Spotify to figure out how to launch in the US. The company has been trying for quite some time now, and the record label demands are basically impossible to meet. And it sounds like Apple is encouraging that. As Greg Sandoval reports:

In meetings in Los Angeles recently, Apple executives told their music industry counterparts that they had serious doubts about whether Spotify's business model could ever generate significant revenues or profits, according to two sources with knowledge of the discussions.

But Apple executives worried about the effects of a free music service might have on the rest of the market. They noted that it's tough to sell something that someone else is giving away, the sources said. One industry insider said it is only logical that if Spotify were allowed to launch a free-music service here, at a time when Nielsen recently reported that the growth of digital sales has flattened out, it could eat into the businesses of proven revenue-producers like Apple and Amazon.

Ah, the amazing ridiculousness of confused short-term thinking. While I also have questions about Spotify's ability to generate significant revenues long-term, the recording industry is making a huge mistake if it buys into the idea that Spotify is likely to cannibalize digital sales. If you look at reports in places where Spotify is widely available, such as Sweden and the UK, the reports suggest that what Spotify actually cannibalizes is unauthorized downloading. Yes, there are a bunch of reports that suggest Spotify gets people away from The Pirate Bay and into a system that at least gets the labels some money.

http://www.techdirt.com/articles/201010 ... itor.shtml

I use Spotify to make sure I'm not being sold a pup, funnily enough

The only problem for the artists is that while it is legal the artists do very badly from it. The royalty rate is pathetic compared to other means.

Thats because of the record companies screwing them not spotify.

Er, the same accusation can be levelled at music download services such as iTunes.

I don't think the royalty rates on either system are actually public and besides they may vary between artists, but the best estimates I could find on the web suggest an iTunes sale nets the artist $0.084 (i.e 8.4 cents US), whereas a play in Spotify nets the artist $0.03 (i.e. 3 cents US). Both are pretty small feed but even I can see they're actually better off per transaction with iTunes than Spotify. The question would come down to gross - I'd imagine a popular artist would get more Spotify plays than iTunes sales...

Jon

Yes but the amounts that the artists get from their labels is an issue between the artists and labels. It is not a concern of users or even the other download stores.